The effects of police and fire pension-system on Peoria municipal government

Saturday

Jun 28, 2014 at 8:21 PM

Nick Vlahos of the Journal Star

PEORIA — Maybe it’s a street filled with potholes. Maybe it’s the lack of a timely response when someone calls city officials to report a building-code violation.

The effects police and fire pension-system issues have on Peoria municipal government are easy to quantify on a balance sheet. Tactile terms are another story.

Increases in pension spending by the city might attempt to fix a metaphorical rocky road but don’t repair actual ones.

“I think what we’ve done is in order to pay for operations, we haven’t put the investment in our capital infrastructure like we’ve needed to over the years,” City Manager Patrick Urich said.

“You can’t just attribute this to the increased pensions. But our infrastructure spending has been limited because of it. Our non-public-safety operational spending has been limited because of it. But … you’ve got to look at it in that perfect storm that our revenues have dropped as well.”

Indeed, the city’s pension obligations became more burdensome as the Great Recession caused tax revenues to slide.

Between 2008 and 2012, the Peoria operating budget hovered around $125.5 million almost every year, according to city-issued statistics. During that stretch, the percentage of the budget devoted to police pensions rose from 2.91 to 4.08 percent. Fire pension percentages increased from 3.87 to 5.21 percent.

The 2014 city budget is about $138 million. The police pension accounts for about $7.3 million, or 5.3 percent. The fire pension runs about $6.65 million, or 4.8 percent.

In 2005, when the Peoria budget was slightly more than $104 million, the police and fire pension shares were about $2.5 million and $3.1 million, respectively.

“If our pension costs in 2014 were the same percentage of the total budget in 2005, we would be spending $6 million less,” Urich said.

State law creates pension plans and mandates their terms. It’s up to municipalities to try to make up the differences if the state doesn’t provide its share of funding or if the investment returns fall short of projections.

Raising property taxes to help pay for pensions is a political and practical non-starter, according to Urich. He suggested pension considerations are the No. 1 factor in budget planning.

“That’s part of what you do,” Urich said. “You’ve got to look at that number and plug it in, and then you start to build your budget around that. It’s absolutely one of the foundations.”

The city-service foundations have been weakened as a result, according to Urich and Peoria Mayor Jim Ardis. Recent budgets have been tight. The city has laid off employees, offered early-retirement plans and consolidated departments.

In a perverse bit of irony, Police Department vacancies have not been filled.

“I think we can say easily that there’s a lot of different needs in the community that would be served if all of a sudden we found $3 million to $4 million a year,” Ardis said.

Safety is first on Urich’s list. The city has pursued federal grants that would enable hiring more police officers and firefighters.

“We need to focus our efforts on public safety, and we’ve tried to do that,” Urich said. “The challenge has been that from a pension standpoint, it’s just consuming more and more of those revenues that we have.”

Ardis has been among Illinois mayors who have lobbied the General Assembly to enact pension reform. Repeatedly, he and Urich have said this is not an attempt to find fault with cops and firefighters, nor to break faith with retirees who rely on their promised pensions.

But both men have said the current trajectory isn’t sustainable. Not the pension payments, nor the delay in infrastructure overhauls.

Ardis isn’t optimistic about receiving help from Springfield, at least in the short term.

“We’re in an election year,” Ardis said. “The mentality is probably like, ‘We don’t want to make part of our constituency mad by doing this.’ And if there’s a possibility the (gubernatorial) administration is going to change, or maybe one side or the other of the legislature is going to change, let them deal with it. It’ll be their problem. Pass the buck.

“I wouldn’t want to bet on it.”

Nick Vlahos can be reached at 686-3285 or nvlahos@pjstar.com. Follow him on Twitter @VlahosNick.